Saturday, December 31, 2016

The parallels are striking. When Reagan entered the White House, the economy was a mess and Jimmy Carter had been totally humiliated in foreign affairs (more than 100 American hostages were held in Tehran at the time). Carter, himself, seemed to be completely befuddled by the unfolding of events.

Now enter Obama. It seems eerily the same. The economy has been whimpering along for several years and the foreign policy disasters have been steadily mounting. The US economy is a mess and its relationships in the world are a disaster. In short, Obama, like Carter, has become a national and world embarrassment.

Meanwhile, the press reactions seem the same. Reagan, according to the press at the time, was unfit to hold office. That's the same song that the press is singing today about Trump. Reagan was pushing lower taxes and regulatory rollback. So is Trump.

Thursday, December 29, 2016

Without providing a whit of evidence, the Obama Administration has expelled 35 Russian diplomats and denied access to Russian embassy staff to two its US locations. Nothing prompted this action apparently other than the thin reed of alleged "interference in the US elections" and alleged harassment of US embassy personnel in Moscow. Whew! This guy Obama is mad and way off the reservation of normal diplomatic activity.

All of this is continued sour grapes at the election losses of November and the prospect of a Trump Administration that promises to obliterate the Obama legacy, such as it is.

Still waiting patiently for any evidence that there was any Russian involvement at all in the email hacking that took place earlier this year, the American public is witnessing an historic imploding of a presidential administration. In short, Obama is losing it. His amateurish behavior, refusing to accept the will of the American public, is shocking. Obama and his pal Harry Reid are stark examples of arrogant, un-democratic, petty losers. Obama's incompetence, arrogance and pettiness is without precedent in American presidential history.

It is interesting to see Trump make claims for job creation by a variety of companies during this transition period. It is very unlikely that Trump himself deserves much credit for these jobs. The decisions that created such jobs were probably made long before Trump appeared on the horizon.

That said, it is certainly a good thing that jobs interest the soon-to-be President. Such concerns held little interest for his predecessor, who seemed consumed about the possibility of warmer temperatures sometime in the future and not much concerned with the here and now.

Trump is proving to be a surprising President-elect. His proposed cabinet does not seem stuffed with the usual political hacks and bureaucrats that are ponied up every four years. Instead, his cabinet choices are successful people, who don't need politics to make their living. This is a very refreshing breath of fresh air.

Most folks that served in the Obama cabinet and other parts of his administration would be starving to death were it not for government largesse (except the super rich ones like John Kerry, who married his way to fortune). Most of the Obama folks are unemployable in the private sector, except as influence peddlers and lobbyists. Trump brings a significant change in that regard. Trump's designees don't need a government paycheck to keep them afloat. They have succeeded without dipping into the taxpayer's pocket.

John Kerry's attack on the state of Israel revealed just how petty and incompetent the Obama Administration is. A feeling of relief, no doubt, was felt by many Americans that this buffoon, meaning John Kerry, never made it to the White House. The two things George W. saved us from was Al Gore and John Kerry presidencies. For that, Americans should forever be thankful to George W.

Revealing an appalling lack of knowledge and an even more astounding lack of understanding of the Israel-Palestine peace process, Kerry devoted much of his talk to a highly personal attack on the current leadership in Israel. I suppose that the current Hamas leadership in Gaza is more to Kerry's liking.

As the architect of the Iran nuclear pathway and the payoff to Iran of $ 150 billion, Kerry had earlier revealed himself as an ignoramus on a world stage. Yesterday's speech just added to his legacy of incompetence. Kerry probably thinks the Syria outcome is his most impressive achievement -- more than half a million deaths on his watch. Congratulations to Kerry. But, it looks like he wants more deaths apparently.

While only a few days remain on the Obama watch, there is more damage that Obama can do to a country that he appears to hate -- the US. More unilateral, likely illegal, acts are yet to come by this vicious and angry loser. He seems intent on establishing himself as the worst president in the history of the country. Kerry's speech is just one more example of a team that seems to be cheering for the enemies of freedom and the enemies of the US.

Wednesday, December 28, 2016

Barrack Obama, as he gracelessly slinks through the final weeks of his presidency, is showing all the petulance that you would expect for someone with a limited world view. Obama believes, apparently, that the US and its allies are the evil empire, that capitalism is fundamentally evil, and that democratic processes and procedures are for the other guy.

Fortunately, January 20th is coming and this disgraceful presidency will come to an end. Obama's arbitrary and destructive acts of the last few weeks have made Donald Trump, of all people, play the role of the country's savior. Trump doesn't despise America and American values. That means that Trump provides a sharp contrast to Obama.

Obama's long standing support for terrorists, brutal dictators, and civic repression has put the world in a precarious position. His main ally, Angela Merkel, has all but destroyed the future of the European Union and guaranteed for Germany, as Obama has for the US, generations of home grown terrorists. Both Obama and Merkel have strangled their economies and humbled two of the world's (formerly) greatest economic engines.

So much damage in so little time. In just eight years, the Obama clique has crushed the US economy, made terrorism much, much stronger, destroyed much of the Middle East, is responsible directly for hundreds of thousands of deaths due to his bait and switch policy in Syria, provided massive support and aid to Iran as well as a safe pathway for Iran to nuclear weaponry with American approval.

Arrogance has consequences. Values have consequences. Obama has the former, but not the latter.

There is no reason to settle for the pitiful economy of the past eight years. Economic growth of 1-2 percent is the worst economic recovery record in American history. Only stifling regulations and an over-taxed economy could produce this result.

Historically, the American economy has averaged 3-4 percent economic growth and it can do so again. All that is needed is the absence of roadblocks -- high taxes, suffocating regulation, arbitrary executive actions. Eliminating these three things, even without any infrastructure spending, will do the trick.

Free markets don't need anything but freedom to do their work. Let the bureaucrats find something else to do. For whatever Donald Trump's faults might be, he doesn't hate capitalism and free markets. That cannot be said of his predecessor.

Tuesday, December 27, 2016

A university education costs an absurd amount of money these days. Strange! Education should have gotten cheaper, given technology. Why has higher (sic) education gotten so expensive?

The right answer is that "education" has gotten cheaper -- much cheaper. But, universities have gotten much more expensive. Is there a contradiction here somewhere? Not really.

Universities have less and less to do with education and more and more to do with social activities and political indoctrination. New majors and fields of study have been created that typically do not require anyone with an advanced degree to park themselves in front of the classroom. Just being an activist with far left political opinions can suffice to receive tenure at even the most "competitive" universities these days.

Most of these new majors and fields of study have no available career path for student graduates except somewhere in a government bureaucracy. The private sector would be reluctant to even consider folks with these new majors -- and frankly for good reason.

Meanwhile, the dorms and student housing now compete with the most modern apartment living, complete with pools, fitness centers, and on and on. This stuff costs money.

Actual education, in the traditional sense, costs virtually nothing. Much of it can be obtained without bothering with a university. Online courses, many of them free, are available in almost every subject.. Most of these courses are dramatically better than what is offered today in the elite universities, who show little interest in undergraduate teaching quality. Why not? Networking opportunities are the main reason for attending an elite university anyway. Education is a side issue.

The Achilles Heel of the modern university is the political indoctrination program that is rife within these institutions. Free speech is no longer tolerated at most elite schools. Instead, the administration and faculty insist on far-left ideology as the only permitted conversation. Anything else is effectively banned. Sooner or later, the folks providing the funding for these universities will wake up to the fact that these institutions are run by people who despise democracy, free institutions, free speech and free markets. So, why fund these places?

Wealthy donors and governments at all levels should take a second look at where their money is going. It certainly isn't going for education.

Thursday, December 22, 2016

It wasn't long ago that the magazine, the Economist, was viewed as a reasonable and independent source of economic news about the global economy. That is no longer the case. Take a peek at the latest issues.

The Economist is awash with articles condemning the incoming Trump Administration as if the new Administration were an enemy of capitalism. What planet is the Economist living on? An administration committed to lower taxes, reduced regulation and a pro-business spirit can hardly be viewed as an enemy of capitalism. This is especially true coming after an Obama Administration that seemed to view successful businesses as criminal enterprises.

The rule of law has been savaged by the Obama Administration, which took the attitude that if Congress wouldn't bow to the wishes of the Obama crowd, then Obama could just do whatever he wanted, with or without Congressional consent. This dictatorial -- to hell with the rule of law attitude -- applied to international treaties like the Iran Deal and the Paris Accords, as well as to the incredible, arbitrary and mostly illegal executive actions on domestic policy taken in the final two years of the Obama Administration.

The American public demanded a return to free markets and capitalism and they will, no doubt, get that return from the incoming Trump Administration. The Economist needs to hear other voices. They are living in the NYTimes-Washington Post echo chamber. American citizens want freedom and free markets and they have an excellent chance of getting that from a Trump Administration. They had no chance of that from a second Clinton Administration.

Wednesday, December 21, 2016

Having shattered the old records for number of Americans on food stamps and the number of Americans who have given up hope and abandoned looking for work, Obama has now achieved another record: most Americans between the ages of 18 and 35 living at home with parents or relatives. See today's Wall Street Journal laying out the dismal facts of this new Obama record.

This, of course, is on pace to challenge the Europe records for stay-at-home young adults. With no job prospects and no future, the youth of Europe simply return home. That is the trend now in America as well, thanks to the Obama presidency.

Tuesday, December 20, 2016

We have been deluged, since the election with media articles about the coming disaster of the incoming Trump Administration. These articles are completely ridiculous.

The Washington Post and the NY Times are the worst offenders.

Interestingly, Paul Krugman is not one of the authors of these absurd articles. Krugman, these days, mainly opines on politics, not economics. He has become little more than a Democratic Party mouthpiece and less and less does he ever discuss economics.

Instead of reporting news, almost the entirety of the front page articles in the Post and Times are hatchet jobs about the Trump Administration. It is hard to find any facts in these articles, but there is extraordinary amount of uninformed opinion -- especially about economics.

The stock market rally, since the election, must be truly embarrassing to these ignorant journalists. How do they explain that they, untrained in economics, know more than markets?

According to the Post and the Times, the economy only prospers when you strangle it with taxes and regulations. That's why Europe is doing so well, I suppose.

Contrary to the views of the so-called journalists at the Post and the Times, the markets prefer freedom to dictatorial and arbitrary government. Modern Venezuela and Cuba are the poster children for the kind of economy the Post and the Times would like the American economy to become.

Fortunately, the public (and their votes), see things differently and have elected people at every level of government in the US who thinks the Post and the Times are wrong.

Freedom is a good thing, contrary to what the elitists at the Post and the Times seem to think. Finally the economy and the folks at the bottom of the economic pile have real hope for improvement. The elitists are striking back through the Post and the Times, but no one listens to them anymore.....fortunately.

Sunday, December 18, 2016

The Obama Administration seemed to be of the opinion that more regulation and more government interference, especially arbitrary rule changes, were good for American business. Maybe the reason the Obama crowd felt that way was that there were no business folks in the Obama Administration.

Everyone in the Obama Administration, with very few exceptions, was a political hack with zero private sector experience. 32 year old lawyers, making six figures, and dwelling in the leafy suburbs of Washington DC, were making the rules for business.-- a world they knew nothing about This is much like someone who has never seen a football game providing the rules and the referees for NFL football. No doubt, such folks think they know what they are doing, if they are arrogant enough, but the likelihood that NFL football could survive such nonsense is slim to none.

The American economy, under Obama guidance, was rapidly making its way toward the economic stagnation of modern day Europe. Obama's counterparts, Democrat politicians in California, Illinois, New York and elsewhere are inexorably leading their states to a US version of modern Greece. No doubt, these Democrats were hoping that a friendly Democratic president would bail them out of their wayward ways. That looks unlikely now.

Trump appears to be taking a different path. His first appointees seem to be mainly business folks or business-friendly folks. They don't hate the private sector as almost all of Obama's henchmen do. Wilbur Ross, the incoming Secretary of Commerce -- a friend of mine, by the way -- has spent his life in the private sector. He knows whereof he speaks. Hardly anyone in Obama's Administration had any idea how things work in the private sector. They had never been there.

All of this is a breath of fresh air.

It makes Democrats and their hand-maidens in the media angry. The media, especially, is full of the most arrogant folks in the country. Having zero experience in the private sector, the media is constantly opining on what is best for the economy. Knowing nothing seems to be the only credentials necessary for the Wolf Blitzers, Chuck Todds, Chris Matthews of the world to pronounce judgment on what is best for the American economy. Their echo chamber just repeats over and over the same nonsense as the American economy slipped into somnolescence.

But help is on the way. The Trump appointees are solid citizens with the most valuable experience such appointees can have -- almost no experience in government and/or politics. Hooray!!

Maybe now the average American, the poor, the left-out minority community will find a champion. Such a champion will promote free markets -- the only hope for folks at the bottom of the economic pile.

The rich and the elitists want to continue their hegemony over average Americans. That won't happen with free markets. If you are a minority, then you will always bow to the majority, when free markets are quashed. The best hope for the disenfranchised and the poor are free markets. Free markets don't care about skin color, gender, social status, etc.

The single most beneficial policy of a new Trump Administration is an across-the board regulatory rollback. Tax reform and simplification comes next. Attacking the plight of inner-city America by use of vouchers in education and regulatory and tax rollback should be a high priority. America does best when every American has a chance to succeed, not just those favored by the benevolence of the Democratic Party.

Abolish the Department of Education, reform the Justice Department, reform the EPA, reform the SEC, abolish the PBOAC, reform the IRS, modernize the Defense Department, privatize the Veterans Administration, abolish the Labor Department (transferring its real functions to the Commerce Department), reform the judiciary by appointing real judges, as opposed to left wing idealogues to the bench.

The future could be astoundingly good, if the Trump folks follow through.

Thursday, December 1, 2016

The S&P small stock index surged 12.55 percent in the month of November, far and away the strongest performing sector of the stock market. Why the huge run in November? The results of the election.

Finally, with the regulatory shackles hopefully being loosened, the spirit of American capitalism can breathe again. Small stocks are the main beneficiaries. Note that large growth stocks gained a mere 1.22 percent. Large companies benefit from stifling regulation which is why their corporate leadership supported Hillary Clinton, almost unanimously. But, small stocks, just like average Americans, benefit from economic freedom, which one suspects, may be on the way.

Wednesday, November 30, 2016

China is dramatically expanding it's production of coal. In just the past five years, China has opened and reopened more than 50 coal plants. All of this dramatically expands China's carbon footprint. Along with Al Gore, Barrack Obama and Hillary Clinton, China is putting more carbon into the atmosphere with each passing day. Meanwhile, all of these folks are asking American companies to sacrifice profits and asking the American economy to slash economic growth in a "go it alone" climate change agenda.

If only America reduces its carbon footprint, which might require some sacrifice by Gore, Obama, Clinton, etal, it won't matter. That is the opinion of the advocates and supporters of the Paris Accord. So, tell us again, what is the point of the Paris Accord? Simply a lone sacrifice by Americans while Europe and China expand carbon production without limit?

The Paris Accords are a one-sided agreement that Obama would force only Americans to abide by. The net effect would be to reduce America to a third world country while China moves forward as the dominant economic power in the world. That must be what Obama and his crowd really wanted in the first place.

Read today's NYTimes today on the expansion of the coal industry in China, remembering that the Obama crowd has destroyed the American coal industry in its drive to please environmental extremists.

Monday, November 28, 2016

Given the outburst of strong emotions over the death of Cuban dictator and modern communist mogul, who do you think the NY Times would interview to get a balanced perspective?

How about Castro's sister? Surprise, surprise, Castro's sister did not think folks should celebrate the death of her brother. Another shocking piece of news from what is an increasingly absurd newspaper.

Sunday, November 27, 2016

The death of Fidel Castro allows Castro's name to be added alongside Hitler, Stalin, Mao, Mussolini and other brutal dictators in the long pantheon of tyrants who used firing squads and prisons to enforce their "goals for the people." When you know all the answers, then you can use any method available to silence dissent and control the population. Castro knew no limits to terror, violence and murder. The result: a shriveled society with an average monthly income of $ 20. Meanwhile Castro's personal wealth was estimated to be over $ 900 million in 2006. This is the progressive end game.

As expected, Obama and the his political 'comrades' (including Vladimir Putin, Jimmy Carter, Canadian Prime Minister Trudeau, UN Secretary General) lauded the brutal Castro and his regime. Trump, to his credit, did not laud Castro. Trump condemned him. Trump had the right response; Obama is on the wrong side of history (and morality).

It's time the White House took down the pictures of their heroes -- Fidel Castro, Hugo Chavez, the Reverend Wright, and put Winston Churchill's bust back where it belongs. We should stop celebrating would-be and actual murderers.

Thursday, November 24, 2016

As President-elect Trump adds three more members to his cabinet, what is the response from the news media? 'Trump adds diversity" to his cabinet. What an absurd way to describe potential cabinet members. Why single out the race and gender of the cabinet members? Is this the only way to think about people?

What about a simple description of these people without identity politics intruding? Why play the race and gender card? Is America just a collection of separate races and separate genders and other arbitrary separate identities? What happened to the "melting pot" notion? The media is a national embarrassment and helps to divide one group of Americans from another by the manner in which they report the news.

The press should stop playing the race and gender (and other) cards and report the news without their usual prejudices, racial animosity, gender animosity, so prevalent in today's journalism.

Wednesday, November 23, 2016

The Texas district court that struck down Obama's illegal extension of overtime pay to a new class of workers reminds us that economists have said nothing about this job killing Obama edict. Anytime you arbitrarily make it illegal for workers and businesses to freely contract, you lower worker income and lower worker employment. There is no economic analysis that says otherwise. Microeconomics is completely clear on this point. So, why don't economists have something to say.

The answer: economists have become political hacks. They are slaves to their left-wing political ideology. Part of this slavishness is 'of necessity.' After all, right wingers do not fare well in the modern academic echo chamber and the world of academic research grants. To get grant money, you have to subscribe to the Elizabeth Warren view of the world. Not much economics in that view.

Look at all the studies that economists have produced that say that increasing a price by government fiat leads to increasing demand. You ask: what studies? Much of the research on the effect of the minimum wage suggests that if we could just raise the federal minimum wage to $ 100/hr, our problems would be over. We would have licked inequality and poverty -- in a sense. Most every job would be gone, so all would be equally poor. So much for inequality. Everyone would now be at starvation levels (think of today's Venezeula) and since poverty is always defined on a relative income/wealth basis, the absence of inequality in world of a starving populus impolies the elimination of poverty.

Pretty stupid isn't it. But, that is exactly the way most of today's academic economists see the world.

Tuesday, November 22, 2016

What happened? Where is the expected collapse of financial markets that were routinely predicted by the NYTimes, Washington Post, CNN, and MSNBC? The pundits forecast a market disaster if Trump was elected?

Instead a historic, post-election rally greeted the Trump victory. Big surprise, of course, to the media who seem to think markets and the economy fare better when politicians demonize businesses and rich people and constantly impose more regulations and higher taxes. It must be a shock to the pundits that markets actually prefer the exact opposite.

A breath of fresh air is blowing through the land. Markets are rallying, spirits are up, and the financial markets are surging -- not only in the US, but globally. Maybe the markets know something that the haters of capitalism don't know.

Free markets may be on the way back. We shall see. But, the markets are clearly happy about the election results even if the media and the pundits are not.

Monday, November 21, 2016

It is no longer possible to have a rational debate about political issues. Read the NY Times and the Washington Post. The position of the Democratic Party, as presented faithfully by the Times and WAPO, is that Republicans are racists and bigots. End of subject.

If you look for a rational defense of ObamaCare, Climate Change, Democratic Party Immigration Policy, Democratic Party Economic Policy, you won't find it. But, what you will find is consistent character assassination, following carefully the Obama-Clinton script in the recent election.. Anyone who doesn't agree with the Democratic Party agenda is a racist and a bigot. That's it.

Meanwhile the NYTimes and WAPO faithfully defended Obama bureaucrats who pleaded the 5th, who accepted immunity deals with the Justice Department in exchange for nothing at all, the Solyndra deal and on and on.

This has now become a one-sided policy debate since nothing of substance is ever offered by the anti-Trump press. Okay, suppose everyone but you is a racist and a bigot. Is that the end of it? If the majority of Americans are racists and bigots, as the Democratic Party, NYTimes and WAPO seem to believe, does that mean that rational discourse of political issues is no longer possible.

It must be great to occupy such a high moral ground that you no longer have to defend your policy positions.

The rolling bankruptcies in public pension land continue unabated. Next up is the city of Dallas in the thriving state of Texas. You don't have to have a sick economy to create a bankrupt pension fund. Dallas is not Detroit, but the endgame will be the same as regards the cities' pension funds.

The story is laid out in some detail in today's NYTimes (buried amongst a phalanx of front page articles labeling anyone who disagrees with NY Times editorial policy as a racist, a bigot, a nazi or a white supremacist).

Notice that there were no prior signals indicating serious trouble. There never is. The trustees and administrators of these funds paper over problems and hide the truth from the public. Dallas is no different than almost every other public pension fund in America. It is difficult to think of a single exception.

So who loses. Essentially everyone. Those expecting a pension will have a rude awakening. Taxpayers will receive the bitter pill of increasing taxes. The only winners are the trustees, administrators and all the folks who have milked these systems and continue to milk these systems. Wall Street wins. The bureaucrats win. The public and the employees lose.

Sunday, November 20, 2016

It would be instructive to the body politic to hear a real discussion between Democrats and Republicans over the economic issues of our times. The overriding issue is economic growth. What policies are good for economic growth; what policies are bad for economic growth. This type of discussion could be useful and interesting.

Banks have held back from promoting economic growth both in the US and Europe. Banks are still operating under the cloud of the financial collapse of 2008. Regulation in both areas are driven more by revenge and economic envy than by sound economic policy. The result: Europe hasn't had any growth in a decade and the US has had minimal growth. So, why not a discussion?

Instead Democrats spend most of their time indulging in character assassination. This was the Hillary Clinton playbook. Describe those who disagree with you as racists and homophobes and then you can avoid discussions about real issues. This continues. As Trump announces his cabinet picks, the Democrats only response is that all the picks are racists, homophobes, etc.

The Democratic Party doesn't seem capable of a rational discussion of today's economic issues.They didn't seem to learn much from the recent elections that have reduced the Democratic Party to the status of irrelevance. One suspects that they will become even more irrelevant, as they continue to avoid discussions of real economic and political issues in favor of demagoguery and character assassination.

Watch the hysterical outbursts that dominate CNN and MSNBC coverage of today's news. There is never any real news on these Democratic Party fronts. Instead, there is round-the-clock vitriol, character assassination and extremist talk. If you want any real news, you have to go elsewhere. These folks spend almost all of their time crying over the recent election and trying to pretend that it never happened.

Too bad. A real discussion about economic and political issues would be useful. So would an honest source of information about the news events of the day. It is a sad state of affairs, when conservative-biased Fox News is the most balanced news network available in the modern day.

Saturday, November 19, 2016

Many words that have been used over the years seem to have changed their meaning in recent years. Take the words: "racist," "bigot," or "sexist." The meaning of these words in the dictionary would leave moderns confused. These words, today, all mean the same thing. They mean anyone who does not agree with far-left Democratic Party orthodoxy. If you think Obamacare should be repealed, you are racist. If you think Dodd-Frank should be repealed, you are a racist and/or sexist. An on and on.

All you have to do to avoid being a racist is to subscribe completely to the political positions of the Democratic Party, especially the views of Elizabeth Warren. It really doesn't matter if you have the racial views of the KKK. That's okay as long as you publicly support Elizabeth Warren and the Democratic Party.

Friday, November 18, 2016

There is an interesting article about Southern Florida in today's NYTimes. The main point is that "climate change" is causing flooding. The article cites residents as saying that homes are expected to be under water within five decades. The article notes that homes sell quickly and that home prices are rising.

So, if that's the case and that much of Florida will soon be under water and uninhabitable, why are home prices rising so fast? Would you rush to buy a home that everyone thinks will be submerged in your lifetime? Would you expect that purchase to be a winner.

Meanwhile, in areas that are expected to be beach fronts within a few years, land prices are stagnant. If you knew that global warming was going to make certain properties, now inland, into valuable beach fronts, do you think prices would be stagnant?

Why are prices flying in coastal areas soon to be under water? What does the market know that the "climate change" crowd doesn't know. Why isn't Al Gore buying up properties inland? At current prices, they are a bargain, if Gore is correct about climate change.

Maybe these "climate change" true believers want to pay up to buy homes in areas soon to be under water, so they can be victims. It's the only thing that makes sense.

Thursday, November 17, 2016

Janet Yellen signaled unequivocally that the Federal Reserve Open Market Committee will raise the repo and funds rate in their December meeting. It is hard to believe that this is a surprise to anyone. Rates have been flying upward since July with only the rates the Fed controls remaining dormant. So, the Fed is now facing reality and raising the two rates that they have any influence over.

Much ado about nothing. The Fed is acting only to avoid the market proving, once again, the irrelevancy of the Federal Reserve.

Wednesday, November 16, 2016

One of the Fed Governors, Minneapolis Governor Neel Kashkari has proposed the ultimate absurdity -- capital requirements on banks that are so high that their effect would slice out 40 percent of our GDP. This is extreme nuttiness.

His entire point is designed to "end too big to fail." Why does anyone care about "too big to fail?" Nothing is too big to fail. If banks had been permitted to fail in 2008, our GDP would probably be fifty percent larger today than it is.

Worrying about "too big to fail" is completely ridiculous. Dodd-Frank should be repealed and the bailouts should end....permanently. There is no reason for bailouts.

Banks need to take on more risk, not less. In a healthy economy, banks as well as other companies will routinely fail now and then. That's what capitalism is all about.

No one ever fails in fascism or socialism. The economy doesn't grow in fascism or socialism and widespread poverty is the normal state of affairs. Who needs that?

Let banks and other business fail. There is nothing wrong with that. Get rid of the FDIC guarantees. Investors can put their money in money market funds that consist mainly of US treasuries. You can write checks on such money market funds and they are no less safe than the FDIC guarantees, since both are backed by the US treasuries.

Unleash the economy and return to real economic growth. Kashkari's proposal is simply another way to further weaken the American economy. We should go the other direction and strengthen the economy.

Tuesday, November 15, 2016

Many Americans are learning more about the state of higher education than they wanted to know. Our nations colleges and universities have been taken over by folks who are essentially vanguard politicians. Education has taken a back seat to the furtherance of a political agenda.

The answer is to eliminate federal and state funding to these institutions. They are not providing a "public good." One could argue that they are providing a "public bad." The charitable contribution deduction that feeds this beast should be eliminated.

Folks that want to use higher education as a political fulcrum should pay for that. Innocent taxpayers are being forced to fund all of this silliness. The average taxpayer cannot afford to send his/her children to these institutions, but they are nevertheless asked to fund them.

Starve the beast. Stop all contributions to these places. Eliminate taxpayer funding for what is increasingly little more than a political operation of the far left.

Monday, November 14, 2016

The charitable deduction creates lots of mischief. Imagine that someone gives $ 1 million to a "charity." Generally, they will then receive a $ 400 thousand reduction in personal income taxes. So, what is actually happening is that the donor is giving $ 600,000, but you the taxpayer are footing the other $ 400,000 without your knowledge or consent.

How much say does the taxpayer have in where this money is going? That's right. None.

Let people who wish to make charitable gifts make them without the taxpayer being on the hook. If they are generous people, then they should be generous with their own money -- not with taxpayer money.

If the argument is that charitable contributions will decline without the financial incentive of a tax deduction, then that alone should tell you that the deduction should be eliminated. Why provide financial incentives, if folks would not otherwise be generous. Maybe these charities don't really merit the support that the charitable deduction provides.

Think of the Clinton Foundation as an example of the problem.

While we are at it, we may as well eliminate the mortgage interest deduction as well, since there is no reason to favor home ownership over renting in the tax code.

Eliminating these deductions could dramatically lower tax rates and increase tax revenues at the same time. A win-win.

Pundits come up with a multitude of reasons why the EU is falling apart. There is really only one main reason. Zero economic growth.

The absence of growth in Europe has the same roots as the virtual elimination of economic growth in the US -- too much government. Taxes are too high and regulations are overwhelming. Net business formation is zero and employment growth, to the extent there is any at all, cannot keep up with the small growth in the work force

This is the price of the welfare state and a meddling government bureaucracy. In America, the tensions created by the absence of economic growth fuel the Sanders/Trump phenomena. In the EU, the same tensions are fueling the rise of nationalistic, anti-immigration and extreme-leftist political parties that are on the rise.

Economic growth solves lots of problems. Killing economic growth inevitably destroys the political concensus needed to govern from the middle. Europe is learning that lesson the hard way as the EU slowly but surely disintegrates.

Hopefully, the recent election in the US might bring enough of a return to free markets to get economic growth back into the picture. If not, the centrist parties in the US will become increasingly irrelevant and the path to a European-like political disintegration is simply a matter of time.

Sunday, November 13, 2016

Large numbers of students at elite colleges have shut down their role as students, taken up signs and devote more time to protesting and disruption and less to classwork and learning. The demand for "safe spaces" and "snowflake" protections is mushrooming.

Who is funding all of this? You are. The American taxpayer, whose income, on average, is a fraction of those who are demonstrating. So, you are paying for folks to insult you. Why do it?

Federal and state funding for higher education should be reconsidered. It is not clear that society as a whole benefits from much of what today passes as research in the modern university. Funding is mainly available for projects that represent a single, usually extreme, point of view. This is not open, unbiased research. This is politically motivated research designed to further a pre-conceived agenda. Why fund this stuff?

As part of tax reform, the charitable deduction should be reconsidered. This deduction is the main source of funding for extremist politics. Why do it. Lets reform it. If people want to give to charities, let them. But, why should taxpayers subsidize such giving in the tax code.

It's time to put a stop to using taxpayer money for blatantly political activities. Higher education mainly benefits those who attend our colleges and universities. These places are increasingly oases of pleasure and comfort and look less and less like the schools of earlier generations. They are hyper-political with declining academic standards and weakening academic rigour. Why fund this stuff?

It's time that those who benefit from education, pay for it. The taxpayers don't need to fund something that issues forth nothing but contempt for taxpayers on a daily basis.

Anyone who labors under the delusion that the Brookings Institution is a "think tank" should take a gander at today's WAPO article by Leon Wieseltier, who is described as a "senior fellow in culture and policy at the Brookings Institution."

Here is how this "think tank" representative described the recent election: "the nasty anti-modern furies that carried this repulsive demogogue to the White House." It gets worse. Here's how this thinker views European governments: "the vile illiberalism that currently disgraces other governments in the West..." An on and on.

The Brookings Institution is not "left of center," as it is often described. It is instead, a homebase for far left fanatics with an extreme hatred for anything American. Leon Wieseltier is a poster child for this hatred. Read the article. It is eye popping.

Saturday, November 12, 2016

US stocks were up 5 percent in concert with a huge global stock market rally for the week. The pundits had, of course, predicted it would be otherwise. The world was going to come to an end, according to the pundits, if Trump was elected. What happened?

Maybe higher taxes, more regulation, more demonizing of business isn't all that good for common stocks. That's one possibility that perhaps the pundits hadn't considered.

The pundits, who mostly approved of Obamacare, Dodd-Frank, and more regulation, think, somehow, the economy and the financial markets can withstand an all-out assault on business. Guess what, stocks think otherwise.

What about the "never-Trumpers." What does Dana Perino, George Will, John Kasich, the Bush family, the various Republicans who urged people not to vote for Trump? They must be really unhappy, now.

If folks had followed the advice of George Will, Clinton would be busy assembling her cabinet and and making further plans to destroy American commerce. Too bad. Is that really what Perino, Will, Kasich, the Bushes wanted? More regulation, higher taxes, a far-left Supreme Court, more executive orders bypassing Congress. Was that the world that Dana, George, John and Jeb were hoping for?

Across America, wealthy young people have taken to the streets to protest that they did not get their way in last Tuesday's election. The vast majority of these protestors didn't bother to vote and couldn't name their own Congressmen or Senators. But, what the heck? Protesting is fun and makes one feel moral and heroic.

The same nonsense is playing out on college campuses -- the ultimate playground of the wealthiest American youth. Students, whose families are almost exclusively in the top five percent of the income and wealth strata of the country, are decrying their unhappiness at the results of the election. They are also letting everyone know what they think of the average American, who they describe as racist, homophobe, stupid and on and on.

These wealthy, elitist students think that only their views should matter. They want to silence others who disagree with them. They have virtually full support from the college administrators and faculty, who also seem to have a lot of time on their hands to engage in this activity.

Most people, who work for a living, don't have time to party in the streets day after day. They have responsibilities, families, bills to pay. It must be great not to face any of the day to day issues that normal Americans have to deal with. That leaves time to grab up a banner, scrawl an obscenity on it and go block some traffic somewhere. Great fun!

Friday, November 11, 2016

When was the country not divided? When was that exactly? The left is arguing that since Clinton outpolled Trump, Trump's election is illegitimate. Really? What about the House and Senate? What about the majority of states that have Republican governors and legislatures? Where have people elected folks with the views of the protestors? Where are the Clintonistas in office?

The answer: the public has overwhelmingly tossed out the Clinton and left wing politicians at every level. That's why Republicans control the White House, the Congress, the nation's Governors and the nation's legislators. The people have spoken; accept it.

Most Americans would like to feel safe and secure. They would like to return to economic prosperity. They would like to return to rule by law, not rule by one person. These folks have elected like-minded people at every level of government in the US. If you believe in Democracy, you have to accept the results.

Watching left wing news (CNN, MSNBC), actions on college campuses and wealthy street demonstrators make it clear that these folks do not accept the results of our democracy. When Obama won, there were zero demonstrations. The "deplorables" did not riot, did not destroy property. They organized themselves and won elections. And now they are in the catbird seat.

This country has always been divided. Nothing new here. That actually is what is great about this country -- toleration for opposing views. The left, the media and the academia would like to shut down opposing views. Hopefully, they will not succeed in their intolerance.

Among top priorities of the newly elected Trump Administration are to repeal Obamacare and Dodd-Frank. If nothing else, those two actions alone could spark an economic revival in America. But beyond those two actions, the Trump forces have pledged themselves to a full-out assault on business regulation, simplified and lower taxes, and repatriation of two trillion dollars in US corporate funds held outside the US.

The prospects for the return of free markets have never been better. The long dormant American economic engine may be revived. Who would have expected this a week ago?

Notice that after the election is over, who is it that is not accepting the results? The losers -- the left. Notice the violent demonstrations now going on across the country. Violence is a key part of these demonstrations. These folks think that they have the right to destroy property of others and they are doing it.

At colleges and universities across the country, the wealthiest young Americans are busy demanding special treatment in the classroom and creating 'safe spaces' so that they can lament the political victory of folks who could never afford to send their kids, much less themselves, to fancy schools.

This is the revolt of the rich. If you look to see who voted for Donald Trump, it was, by and large, average Americans without college degrees. These wealthy, elite demonstrators have nothing but contempt for the average American. As Hillary Clinton, so aptly captured the moment, these people are "deplorables' and are "irredeemable."

The elite are striking back from their cushy spots in academia -- their target is the average American.

Thursday, November 10, 2016

The average American is not sitting in a cushy job, protected by tenure or in some other way protected from competitive forces. The average American is worried about their job, their family, their freedom.

The elite are not worried about any of the issues that face the average American. They are worried mainly about providing government subsidies and protection to themselves and an elite few. The average American, to the elite, is a racist, a homophone or much, much worse.

As the elite move from their limousines into their jets they never encounter the folks that led to the Trump victory. They speak mostly to people who take orders from them or who are other elites. The elite view the average American with contemptuous superiority. The arrogance of the elites is breathtaking.

If you want to know what the elites are thinking and what they think of the average American, read the NYTimes and the Washington Post. The elites are uncomfortable with "messy" democracy. They prefer, like Elizabeth Warren, to make the rules and have the average American accept their hegemony. Or, like George Will or Dana Perino on the right, they want the country to elect candidates that they approve of, who went to the right schools and have the appropriate table manners. Issues are really not important to the elites, so long as they run the show.

It became clear in the recent election that wide swaths of the media are little more than direct arms of the Democratic Party. The media shamelessly aided and abetted the Clinton candidacy in numerous ways that most of us never knew. But, now we know. We always suspected media bias. This is far more than bias. This is subservience to a political party. That's not bias, but something very different.

Free expression and free markets have been under attack for several decades by the political establishment (of both major political parties). Now, perhaps under Trump, this can be reversed and free markets and free speech can be returned as staples of American life.

This means big change. The elites are threatened and they will fight back. Look at the current demonstrations around the country by wealthy left-wing students, who see their privileged positions in society threatened. These students like the cushy road into entitlement land, putting them into bureaucracies so they can cavalierly destroy industries, coal comes to mind, that they don't approve of. Coal minors and their families be damned, say the elite, as they run rough shod over a community of average Americans plunged into economic despair and economic ruin.

From the perch of wealthy entitlement, the left subscribes to half-baked slogans, such as Climate Change, as they go about destroying the hopes and dreams of average Americans. Climate Change is based upon little more than a scientifically unsupported act of faith. Research funds are not available to those who don't buy into Climate Change. If you want research funds, you have to drink the koolade. So, they buy in and support these things so that grant money will continue to flow in. Is this corruption? Yes, it is. But the elite don't care because they are beneficiaries of this corruption. Meanwhile the economy is bludgeoned mostly by bureaucrats who never saw a free market that they approved of.

Sooner or later, the empire strikes back and now they have struck back. The elites and their religious ideologies and their contempt for average Americans are now threatened. The Trump revolution looks to displace comfortable perches of all of these elites. That's why you see the polemics in the NY Times and the Washington Post. That's why you see demonstrations by wealthy leftist students.

The elites want to maintain their control and their economic advantages over the average American. They will stop at nothing to destroy free markets. Their insulting attitude toward the political views of average Americans -- see today's Washington Post article about how Trump's victory is a victory for the Ku Klux Klan -- will not stop. That's what being an elitist is all about. They don't care one whit for the average American -- white or black, Muslim or non-Muslim. All the elites care about is maintaining control and keeping the average American in their place.

Evidently repealing Obamacare and repealing Dodd-Frank are among the top priorities of the Trump Administration that will begin on January 20th. Eliminating the arbitrary, mostly illegal, executive actions related to climate change is next. (Whatever you think of climate change, the executive under the US Consitution never had the authority to impose these regulations, without Congressional authority, in the first place).

This could have a dramatic effect on the US Economy and it would be extremely positive.

Some say: how can you repeal ObamaCare. Then what? The answer is obvious. How about a free market in health care? Let consumers buy whatever insurance policies they want to buy in the free market and let insurance companies sell whatever insurance policies they want. That simple principle would enable the US to have the best health care provision in the world and "bend back the cost curve."

Fixing the problems related to pre-existing conditions, insurance companies dropping unhealthy consumers and arranging vouchers for the poorest among us is easy. There is no need to destroy the American health care system in order to fix these relatively simple problems (perhaps the current auto insurance system in US might provide a few clues about how to fix this). In any event, replacing Obamacare with a free market health system is almost trivial in concept and can be done.

Placing a cap on medical lawsuits and permitting interstate insurance activities solves most of the other problems related to health care. These are easy things to do and should be done.

What role is there for the government? None. Vouchers will solve the problem of the poor. Nothing else would be required.

Repealing Dodd-Frank is easy. Repeal it. Done. Make all regulations related to Dodd-Frank immediately invalid. Done. Eliminate the Consumer Protection Agency. Done. And on and on. It is time for the American economic engine to wake up and breathe fresh air once more. It looks increasingly likely that Trump and Congressional Republicans just might make that happen.

It is time to bring the broom to the Obama nightmare. Drain the swamp and drain it thoroughly.

Wednesday, November 9, 2016

Incredible? The little guy has spoken and the elites have taken it on the chin. The elites have never understood why excessive taxation, excessive regulation, endless litigation and divisiveness are not popular with most Americans. People want jobs; they want rising income and they could care less about the nonsense talked about by the Clinton team.

Nov 8, 2016 was a great victory for the little guy. Admittedly, a flawed messenger produced that victory. But, was there anyone involved in this thing who wasn't flawed?

Free markets may now have a window of opportunity. Other than possible protectionist tendencies, the rest of the Trump economic package will be a healthy respite from the Obama-Clinton strangulation of the US economy. Good things may lie ahead.

Tuesday, November 8, 2016

This has to be the worst election in US history. Virtually no real issues about policy surfaced in this nightmare of personal attacks and flawed candidates.

So, what are the economic issues?

There is one central, overriding issue, that didn't really get discussed in the campaign -- the economy. The absence of economic growth in the US and in the western countries generally is the biggest and most important issue in the modern world.

Since the 1850s, economic growth has transformed the world and created a gigantic middle class in every developed country in the world. Since the 1990s, this growth has stumbled and finally halted. Absence of economic growth is the source of most of the incredible discontent that is reflected in the campaigns of Bernie Sanders and Donald Trump.

Economic growth and free markets are the essential ingredients of a society that wants even the poorest and most dispossesed citizens to have a chance. Take away growth and free markets and only political influence will reign. If you know the right people, then you have a chance. Otherwise you are condemned to declining opportunities and living standards and progressively poorer government institutions, such as schools, hospitals, and legal structures. That's where we are.

Americans have no faith in the future. It shows up in every poll. Debates about inequalities and injustices dominate the conversation. Why? Because the economic pie doesn't grow any longer and it is increasingly clear that the pie will not grow in the future. So, let's fight over it now.

Nothing changes this, but economic growth. That won't happen regardless of who wins the election without a sea-change in the attitude of our citizens toward free markets. Support for the minimum wage is a clear indicator of the current cultural antagonism against free markets. Free markets are the only hope for people at the bottom of the economic pile. The elite will never, willingly, surrender their hegemony, no matter how many promises they make.

Monday, November 7, 2016

Wikileaks exposed an email from John Harwood, a so-called "journalist," who appears regularly on CNBC. The email from Harwood to Hillary Clinton's campaign manager asked Podesta what questions Podesta thought Harwood should ask Jeb Bush! Presumably, Podesta provided him some good gotcha-moment questions. That seemed to be Harwood's specialty as a presidential debate "moderator."

Harwood, when asked, said that it was perfectly normal for him to solicit the campaign manager of Hillary Clinton to provide questions to ask Jeb Bush. Well, for him, it is perfectly normal. That's whats happened to standards of journalism in the modern political age. As for the term "moderator," perhaps that should be redefined to mean "partisan political combatant." That definition better fits John Harwood.

Harwood is completely useless if one is looking for objective and independent analysis. If what you want is the party line from the Obama-Clinton axis, then Harwood is your man. But, why watch him? Better to watch the "horse's mouth," so to speak. Obama and Clinton can speak for themselves. They don't need Harwood as their parrot.

Sunday, November 6, 2016

Affluent liberal economists are constantly looking for things to do. Proposing higher taxes and more ways to waste taxpayers' money can't quite fill up all the idle time that economists seems to have available. Now, the next new idea is "pre-distribution" economics. The NY Times has tossed up a trial balloon for 'pre-distribution' economics in this morning's edition.

Here's the way this works. Instead of letting business owners earn the profits of their investments, the 'pre-distribution' gang proposes that workers share in the profits. This, of course, is not a volunteer program. This is to be mandated by the full force of law. If you wish to invest your money in a business, you no longer will be entitled to the proceeds of that investment. That's over in the brave new world of 'pre-distribution' economics.

In this brave new world, who will invest in American companies? The answer: no one. Why not just invest your money in other companies in other countries where investors get the fruits of their investments?

Once these geniuses make it illegal to invest your own money in a business without sharing your profits with some third party, investments in American companies will disappear. Then, I suppose, the plan will be to have 'government' take up the slack. The government will invest directly in businesses.

This is a pretty direct road to fascism. No doubt you will need a lot of extreme-left economists to supervise this entire exercise. Presumably modern day Venezuela will be the political and economic model.

If you think this idea is a joke, check it out. The article is by Neil Irwin and is billed as the chief policy idea to be promoted in the soon-to-be Clinton Administration.

Saturday, November 5, 2016

It is routinely assumed in public policy debates that incentives do not matter. Policy wonks increasing talk as if increasing a price has no effect on demand and as if providing a subsidy has no impact on behavior. The fact that 94 million working age Americans are no longer part of the work force is attributed to what? Why has the American savings rate collapsed?

Economists increasingly look for non-economic arguments to explain obvious economic facts. Why? Because the economic arguments would undermine the support for the policies that economists wish to support.

Here's an example. In China, pensions are provided by the provinces, not by Beijing. A recent WSJ article interviewed Chinese citizens regarding their faith in whether or not they will eventually receive their pensions. What they found is that the average Chinese do not have any faith that their pensions will be paid.

What about America? Whenever anyone criticizes the absence of sound funding for social security or for state and local public pension funds, the left tries to silence such critics by arguing that criticizing the funding scares people and creates public anxiety. So, instead, the left argues that everyone should pretend that social security is actually properly funded and nothing needs to be done to repair state and local public pension funds. All is well, they say.

Leftist economists argue that there is no difference between the situation in China and the situation in the US regarding pension funds -- both are woefully underfunded and it is likely that pensioners will not receive what is promised. Are these two situations the same?

No, they aren't. Because the Chinese citizens know that they are not going to get the full value of the pension promises, they have taken action on their own -- they have raised their savings rate. Chinese private savings rates are at the 30 percent level. Even if the pension funds don't materialize, the average Chinese are taking steps to avoid disaster because they are well aware that disaster is what lies ahead.

What about the average American? The average American's saving rate is zero. The average American believes the lies told to them by the left and public policy wonks. They believe that social security and medicare will solve their problems in old age. So, they take no action to ward off disaster.

The difference is in the information they have. If you know that no one will provide you with a pension, you save. If you are fed lies about how well funded your pensions and health care systems are, then you don't save. Then incentives take hold. You take action to protect yourself if you are properly informed. The facts show that incentives matter.

The Chinese are in a better situation because they don't believe the lies their government puts out. Woe be it to the average American who believes the patently false lies about the funding of social security and medicare.

Thursday, November 3, 2016

As expected, the Federal Reserve took no action yesterday at their Open Market Committee two-day meeting. But, the Fed did signal a rate hike for December....whoop-tee-doo!

Rates have already climbed more than 50 basis points on longer dated treasuries. It is becoming all too obvious that the Fed is irrelevant in the rate setting market. They don't matter. The infamous December 2015 "Liftoff," which "raised" rates did nothing of the kind. Across the board, interest rates fell after the Fed "Liftoff."

Now rates have been moving steadily higher since July ...... without the Fed. So, at the end of the day, what difference does the Fed make? You would think that their actions have at least a 50/50 chance of moving rates in the direction they desire. So far, they are batting zero.

It is 100 percent certain that the Fed will raise repo and funds rates in December, so that they can continue to pretend that the Fed matters. The Fed only matters because of their absurd policy of buying several trillion dollars worth of debt securities that now hamper their ability to conduct monetary policy. Otherwise, the Fed is irrelevant.

Wednesday, November 2, 2016

This past month Fox Business News overtook and surpassed CNBC. That's pretty shocking. CNBC has been the go-to cable station for financial news almost from its infancy. But, no longer.

Why?

Maybe Andrew Ross Sorkin is the reason. He certainly is for me. His constant advocacy of a political view interferes with what would otherwise be interesting and entertaining financial eommentary.

Add in CNBC's John Harwood, who is completely in the tank for Obama and Clinton. Harwood even checked with Podesta to be certain that Hillary's campaign manager didn't have any trouble with Harwood's reporting. It is hard to see Sorkin and Harwood as commentators. Instead, they both seem to be active partisans in a political campaign with little or no objectivity for financial and/or political news. Who needs this?

After a while, folks get tired of being insulted and Sorkin goes out of his way to insult anyone who disagrees with him. So, why watch him? It's not like you're hearing a reasoned presentation of an opposing view. What you hear from Sorkin as well as Harwood are mainly insults and innuendo. So, the migration to Fox.

Fox is blatantly political as well and that's not good. But, most people who are seeking financial news are politically more in sync with Fox than with CNBC. CNBC, if they would stick to financial commentary, would have never lost their perch. But, by unleashing Sorkin and Harwood on a daily basis to promote Hillary Clinton, Elizabeth Warren and others, CNBC has lost viewers who get sick of the daily diet of Sorkin and Harwood and move to Fox. I have.

You see a similar pattern in professional sports and college athletics. Deliberately insulting veterans, the police and the country, many athletes have chosen to go public with their lack of respect for the American flag. Fine. But, why watch these folks anymore. Not me. I am tired of these folks insulting half (or more) of the population with their arrogance.

They want a smaller audience. Every indication is that they are getting that smaller audience. That's what they wanted and what they deserve.

I respect the American flag. I have no interest in cheering for, watching, or in any way supporting folks who disrespect the American flag. And, I have a lot of company.

Normally in economic recoveries, the United States has been blessed with almost double digit economic growth in the early stages (25 percent in 1933, for example) and then things taper off to four percent for the balance of the next five to six years. There have been differences here and there, but US recoveries have been powerful in all cases, except for the period after 2000.

Why?

The growing tenacles of big government have made it increasingly hard for the American economy to grow. This same pattern has been evident in Europe for decades. High taxes, massive regulation, burgeoning entitlements reinforce one another to curb any real chance for economic growth. It is what it is and we are where we are.

But, who suffers?

Those who lose jobs to international trade cannot find new ones in a sluggish economy. We lost jobs to trade in every decade since World War II, but we more than made these jobs up by the vigor of the American economy. Now we don't make those jobs up because our economy has lost its zip.

People at the bottom of the economy had real opportunity before 2000, but now they don't. Why? Regulatory barriers, high taxes, minimum wage regulations, Obamacare, and on and on. Thus, concerns mount about inequality. These concerns were largely absent when the US economy had high levels of economic growth. Now with no growth, inequality concerns are front and center.

The elites don't get this. They don't see economic growth as a problem. They don't see economic stagnation as a problem. The elite have jobs, they have tenure, they have union protections and they plan to hold on to them. They don't really care what happens to those at the bottom, as long as those at the bottom vote to keep the elites in power. Beyond that concern, the elites could care less.

As the US economy deteriorates, social and economic problems will multiply. There will be calls for even more government control and spending (note the current calls for increased infrastructure spending). All of this pushes those at the bottom of the economic pile further down and enhances the wealth and status of the elites.

The idea of America as a land of opportunity becomes more and more a memory of the days when the American economy grew and American politicians were committed to that economic growth. We are now in a very different environment.

Monday, October 31, 2016

Don't confuse TPP with free trade. Free trade is free trade, not massive protections for unions, special deals for environmentalists, and host of other restrictions that knee-bend to the mania of the left for politically correct issues. Free trade is simply free trade. TPP has nothing to do with that.

The British economy dominated the world during the 19th century for one main reason -- free trade. The Repeal of the Corn Laws ushered in unprecedented growth in the British economy and the world economy. This was free trade, not the absurd deal brokered by the Obama folks called TPP.

TPP is "Obama trade" -- a far cry from free trade. There is no reason to support TPP or even encourage it. It needs to be scrapped in favor for real free trade.

Sunday, October 30, 2016

Rates are spiking up -- not only in the US but globally as well. This has to be caused by either inflation fears, credit quality fears or both. Meanwhile, economic weakness seems to be shutting down economic growth globally. The world is entering a period of the perfect economic storm.

Even with the recent GDP growth estimates for the third quarter in the US, the overall US growth rate is sluggish and likely weakening. Other data suggests the US economy may be slipping into recession that the data will confirm in 2017. The likelihood of further economic strangulation from the political process suggest growth may be forced by the politicians further into negative territory.

The Fed is a growing joke. As the economy slips and rates rise, the Fed is set to raise repo rates and the funds rate -- two rates that are increasingly irrelevant to the economy. But, the Fed has to act soon, as other rates are skyrocketing, or the Fed itself will be exposed as irrelevant. It will be interesting to see the Fed "raise rates" in the face of an economy entering a recession. I suppose Janet Yellen will, later, explain this away by things she didn't anticipate. She will have to come up with some rationale.

The growing calls for infrastructure spending bump against the reality of massive debt already plaguing every major economy in the world. There is simply no room for more spending in any country's budget these days. The massive transfer payments, subsidies, and rent-seeking programs built into western nations' budgets will prevent any money being available for even the most basic needs of government. The idea of increasing infrastructure spending is laughable.

Meanwhile, politicians call for higher taxes on the rich. This is a pipe-dream. Under current law, Warren Buffett doesn't need to file a tax return or pay any taxes at all, regardless of what the rates are. Rich people can adjust their taxable income at will. Last year Buffett paid $ 1.6 million in taxes. That suggests an income of $ 3 million. That's a joke for someone worth $ 65 billion.

"Taxing the rich" will further remove incentives for entrepreneurs to increase employment and business formation. This just further weakens an already weak economic environment.

Stocks have bumbled along as earnings continue to wither. But, the stock market cannot continue to produce if the underlying economies are weakening.

Saturday, October 29, 2016

GDP growth was announced on Thursday to have increased 2.9 percent for the third quarter of2016(divide that number 4 to get the actual number). Almost every component of GDP was pitiful. The sole significant increase was a10 percent jump in exports. Does anyone believe that?

Looking under the export numbers was a spike in soybean sales. How the Commerce Department could put this out with a straight face is mind boggling. A soybean spike - really?

2.9 percent is weak at best, since it implies year-to-year growth of 1.5 percent - barely a pulse.

But look for revisions, after Clinton has been safely elected. The Commerce Department is not a neutral bystander.

Thursday, October 27, 2016

So, did Britain collapse after Brexit? According to Paul Krugman and all of his left wing buddies like Barrack Obama, Britain's economy would suffer dramatically from Brexit. Maybe. But, so far the results are the exact opposite of the predictions of the doomsayers.

"The economy has continued to expand at a rate broadly similar to that
seen since 2015 and there is little evidence of a pronounced effect in
the immediate aftermath of the vote," said Joe Grice, Britain's chief economist of the Office of National Statistics, according to the Associated Press today.

Growth wasn't huge -- 2 percent at an annualized rate -- but a lot better than the growth rate of the US and the Eurozone during the same period, where all the naysayers hold sway.

Monday, October 24, 2016

Economists and liberal business types are now united in the view that America no longer has the potential to grow at the rates, that until the last two decades, it has historically grown. Once the mightiest economic engine in the world, US economic growth is now a pitiful shell of its former self and more and more left-wing pundits say that's the new normal.

Well, possibly. Imagine that a $ 15 minimum wage becomes law. Do the numbers. $ 15/hr translates into $ 32,000 per year. Now tack on employer-provided health care, social security, unemployment compensation, implied litigation costs and on and on. You quickly get to $ 50,000 per year. So, in the brave new world that left-wingers are leading us to, it will cost $ 50,000 to hire an entry level employee with no apparent skill set.

How do folks with high school educations or less ever get hired if the entry level compensation implies $ 50,000 in costs to employers? More than half of American potential employees fit into this category, so that, in effect, the $ 15 minimum wage law makes it a crime to have a job if your skill set at day one is less than $ 50,000.

How do you get a skill set? Historically, folks learn on the job. That will be against the law in the brave new world of $ 15/hr minimum wage laws. No longer will anyone but the economically elite have access to the job market in the world being prepared by the left.

Well, in that case, yes! Economic growth will be over. In fact, economic growth will most likely be negative if we get to a $ 15/hr minimum wage.

Add in the unbelievable proliferation of new regulations that hamstring banking and new business formation and economic growth will likely be impossible.

So, the left is correct. There is no economic growth in our future. The left has seen to that.

The left says that the absence of economic growth is caused by a decline in productivity. 'Productivity" is measured by output per worker (not by any measures that you and I might think of as technological growth).

Productivity can go down by the simple expedient of forcing businesses to hire and employ employees that they don't need or who are unproductive. Hiring "compliance" employees to deal with a mass of new regulations reduces productivity by definition, since compliance officers don't produce anything and mainly serve to retard production.

Jamie Dimon recently noted that the new regulations since 2009 have forced JP Morgan to hire 30,000 new "compliance" officers. Guess what? The productivity at JP Morgan has collapsed.

Across America businesses are reeling from the autocratic, unpredictable rash of new regulations that occur hourly in the new America. Not much time is left to produce more goods and services. The fear of ever more regulations is enough to prevent anyone from thinking out of the box.

New ideas, like Uber or Airbnb, immediately attract the attention of luddites like Elizabeth Warren, who never met a capitalist idea that she approved of. Warren is the main cheerleader of the modern Congressional witch-hunt that hounds corporate leadership, who have the temerity to do things for shareholders, as opposed to doing things that fit the agenda of the left.

Fascism is defined as the intertwining of government and big business. Warren is the leading proponent of fascism, if we define it properly. The idea that a company should be free to pursue profits in every lawful manner is opposed by Warren, who thinks companies should mainly do her bidding as she sees it, which admittedly changes from moment to moment.

So, I guess all these left-wing economists and their "business" pals like George Soros and Warren Buffet are right. Economic growth probably is no longer possible in the brave new world toward which their policies are leading us.

Friday, October 21, 2016

The idea of a common currency and a broad reduction of barriers to trade was a marvelous idea. But European Union bureaucrats could not leave well enough alone.

Instead, the EU bureaucracy hammered down an enormous number of new restriction on the daily lives of citizens in EU countries. (For example, it is against the law for a child under eight years of age to blow up a balloon in the EU). The straw that broke the camel's back was the unlimited immigration into the EU of refugees that has been ongoing for the last three years.

In an article in today's NYTimes, James Kanter and Stephen Castle provided the following absurd viewpoint:

"the European Union's ability to plot a united and ambitious path forward is losing out to parochial concerns."

The above quote is ridiculous. "Parochial concerns" are, in truth, legitimate objections by ordinary Europeans to the overbearing rules and elitism of the unelected bureaucracy that runs the EU today.

The "plot" described above as a "united and ambitious path" is based on the whims of a handfull of elitists, constantly making rules without any citizen input. The public in Europe is sick and tired of this and are rebelling against the elitism of the EU bureaucracy.

The Brits were right to leave the EU. In time, most of the citizens of the EU will push to follow the lead of the British and escape this small band of elitists that are ruling their day to day life.

Friday, October 14, 2016

It is always a paradox why government policy tends to be so uniformly pernicious. We are about to see another example of that.

Third quarter data shows that bank commercial lending fell for the first time in six years. Given other data, there is a very strong likelihood that the sluggish economy is about to weaken into recession territory. Perfect time for a rate hike? Club the economy on the way down? Is that the idea?

But, that is exactly what is about to happen. And the reason? The Fed does not want to appear irrelevant. All other interest rates have been rising over the past couple of months. Only the repo rate and the funds rate have not been rising. Those are the only two rates that the Fed has any possibility of controlling (and, frankly, only by completely artificial methods).

Gone are the days when anybody believes that the Fed can loosen or tighten. Having a $ 4 trillion balance sheet does not leave much room for flexibility.

So, we are about to see an interesting spectacle. The Fed will act to "raise rates," while the economy weakens. Good combination. Is that what they teach in Macroeconomics these days? Raise rates just as the economy weakens?

The absurdity of Fed policy as well as the bankruptcy of modern academic Macroeconomics is just about to be put on sharp display.

No rational person believes that a policy of raising rates coincident with a falling economy is sensible policy. Only Janet Yellen and other "political" economists can defend what they are about to do.

But, if they don't do it, the Fed will be exposed as irrelevant. The Fed is irrelevant, but they desperately do not want that fact revealed to the public.

Thus, look for the Fed to "raise rates" while the data shows the economy is weakening. Interesting and ridiculous policy, but perfectly predictable.

Goodbye stock market.

You might wonder: why other rates are rising? Because the long dormant inflation is beginning to rear its head. That will move all rates higher regardless of whether or not there is a Fed or what it may or may not be doing.

Yes, inflation can pick up exactly at the time the economy is faltering. Does anyone remember the 1970s and "stagflation." That's where we are headed.

Thursday, October 13, 2016

Now that interest rates have increased everywhere except in the overnight repo market and the federal funds market, the Fed will boldly announce a 25 basis point hike in repo and funds. What choice do they have?

If the Fed does nothing, it exposes the fact that their policy has no influence over interest rates. The ten year yield has now pushed through the 1.8 percent level and is headed higher. So are all other rates. How stupid is the Fed going to look in a higher rate environment if they don't move their two (largely irrelevant) rates higher?

Monday, October 10, 2016

Andrew Ross Sorkin has an article in today's NYTimes that gives a glimpse into the future for retirees expecting pensions under CALPERS -- the largest public pension defined benefit plan in America.

To cut to the chase: Patsy Jardin, who is now 71 years old, worked for the city of Loyalton for 29 years. She retired in 2004 with an annual pension of $ 48,000. Now, CALPERS is telling Ms. Jardin that her pension will be cut to $ 19,000. She has been a member of the CALPERS employee pension fund all these years. Now, in retirement, comes her surprise. It's mostly not there.

What is CALPERS doing about it? Nothing. So, tough luck Ms. Jardin. That's what the big government folks do for you. They promise big pensions and then, when the time comes, tough luck.

This article is a worth a read. It is the future for most average Americans. Ms. Jardin's fate is just the beginning. More to come.

Saturday, October 8, 2016

Colleges have rarely been defenders of free speech and they are not today. Colleges only permit free speech if that speech is consistent with the current views of the college administration.

When I was an undergraduate, the editor of the Rice Thresher, Hugh Rice Kelly, was removed (in 1964) as editor by the school's administration because he wrote an editorial condemning US policy in Vietnam. He was never reinstated. The far right was in control and they enforced that control. No faculty supported Kelly.

In the late 1940s, Woodrow Seals, editor of the student newspaper at the University of Alabama, wrote an editorial that appeared to support integrating the all-white student body at the University of Alabama. Seals was removed from the student body and only allowed to graduate after writing a letter of apology for his errant views. No faculty spoke up for Seals at the time. (Seals would later be a leader in the movement for integrating southern public schools while serving as a Federal District attorney in the Kennedy Administration and was later appointed a Federal Judge by Lyndon Johnson).

Today, the far left runs almost every college in the US. Any statement that doesn't agree with the views of those running these schools carries the potential for dismissal. If you criticize the Black Lives Matter movement, you run the risk of losing your employment.

There is no free speech on most college campuses. If you have the political point of view of the current administration, then you are free to parrot the views of the current administration. Otherwise, forget free speech. It isn't available on college campuses and never has been. Academics are no fans of free and independent thought and they never have been.

The Pound has fallen almost 20 percent, against both the Euro and the Dollar, since the vote in June of this year severed British ties to the European Union. This is a large drop but has no obvious implications. Nevertheless, the pundits who regularly beat the drums for big government control of the private markets are citing the fall in the value of the pound as "proof" that Brexit will be disastrous for Britain.

The economy and the financial markets haven't gotten the message apparently. Britain's economy and stock market are, if anything, stronger today than prior to the Brexit vote. Hoping and praying for a British collapse, the modern day collectivists point the finger at the pound.

Meanwhile, for other countries (Greece and Italy as examples), the Krugmans of the world cite absence of the ability to depreciate your currency as the major weakness of a currency union. Can these economists have it both ways? Currency depreciation is good for you; currency depreciation is bad for you. I guess which way the wind blows depends upon your current political stance, not the underlying economics.

The truth is that the drop in the pound is largely irrelevant. Where is the need for a decline in the value of the Texas currency against the Oklahoma currency? Is the single expedient of a common currency enough to extinguish the constant clamors about the significance of the value of one's currency.

The value of one's currency against another is largely irrelevant unless there is some special pathology, such as denominating one's debt in terms of another country's currency. Short of some special circumstance, this is much ado about nothing.

Friday, October 7, 2016

Today, the Labor Department released another pitiful jobs report. It seems everyone has adjusted to the new normal of limp-along growth and minimal job creation. The economy that we once knew is no more. The hits the poorest among us the hardest, so we can look for increased civil strife in the US and further increases in crime, which is obviously on a major uptrend.

A strong economy heals a lot of problems; a weak economy creates a lot of problems. The last pillar of hope in this environment is the stock market. The stock market has made meager gains the last couple of years, but such gains are probably done for. The prospects are not good -- not for the real economy, not for the financial sector, not for the average American.

Interest rates, for those who watch such things, are headed upward -- with or without the Fed.

Thursday, October 6, 2016

Larry Summers and Robert Rubin, long time Democratic Party stalwarts, have each penned an op-ed in recent days supporting the same ole, same ole: more big government spending is the answer, both for the US and the world.

These op-eds are sitting alongside articles that show that world debt, private and public, has spiraled completely account of control. Debt in the developed world is now three times the level that was considered, just a decade ago, as unsustainable. I guess Summers and Rubin have revised their views as to what is unsustainable, just in time, I note, for the election. Good timing guys!

Neither Summers nor Rubin has any concern that government regulations have all but eliminated new business formation and effectively destroyed our commercial banking system. I guess their view is that, even though, increasing areas of the private sector are being outlawed (don't forget health care), nevertheless, especially after reading that Hillary plans to confiscate at death any significant wealth creation, entrepreneurs will rush out in celebration of "infrastructure spending" and get the economy rolling again. No chance Larry...Robert.

Entrepreurs are scared to death. Western economic growth is over. "Infrastructure spending" is little more than a phrase which translates to "transfer income and wealth from average Americans to our political friends." That's the plan and Summer's and Rubin's friends are well aware of that message.

The $ 800 billion "stimulus" package of 2009, passed with Summer's and Rubin's enthusiastic trumpeting, produced almost no infrastructure spending -- even though, "infrastructure spending" (wink...wink) was their main reason for endorsing the package. Instead the "stimulus" package was used almost exclusively for political payoffs to friends of Barrack and Bill. But, in that sense, it did what was intended by its supporters.

Wednesday, October 5, 2016

College athletes should get paid. That would make more sense than the current system. Paying athletes will likely also eliminate much of college athletics, but that may be all for the good.

Increasingly college athletics has less and less to do with education and more and more to do with money and politics.

Why have an "indentured servant" program in college athletics? If college athletes can fill the stands, then pay them. The education that most of these kids receive isn't worth much, but real money could be worth a lot for some of them.

The only athletes that would likely get paid anything significant would be in the football and basketball programs. It is increasingly questionable whether these programs are consistent with the overall educational goals of the modern university. Pay for athletes might fix this.

Arguably the worst run state in the country -- Illinois -- is now pulling back its business with Wells Fargo.

In another attack upon the hapless and innocent current shareholders of Wells Fargo, the corrupt, incompetent and soon-to-be bankrupt state of Illinois is granting itself the moral high ground. This state has stolen more money from its taxpayers than any another other state in the US, excepting only California and New York.

This should be a Saturday Night Live episode. The morally bankrupt state of Illinois holding forth on what a private company should or should not do.

Once again, the losers will be the innocent -- the taxpayers of Illinois and the innocent shareholders of Wells Fargo, mostly pensioners and foundations. Meanwhile, corrupt politicians continue to ride high and rough over the innocent.

Monday, October 3, 2016

Economics was once the study of the consequences of market activity by individuals participating in free markets. As free markets have eroded in the developed countries, so also has the academic discipline of Economics.

Incentives are now thought not to matter when people make economic decisions, according to the "New Economics." The new approach is to begin with a political point of view and a very specific conclusion. Then run a few regressions over and over again on the same data until at least one of the regressions reaches your conclusion.

Another strategy is to mix and match data to reach spurious conclusions. For example, suppose you wished to know if workers in the same industry were subject to wage discrimination. Imagine that the industry was NFL football. Calculate the income for men, then for women and see what you find? There are many, many men making tens of millions of dollars, but not a single woman making that much. Conclusion: wage discrimination.

Most publicly quoted studies of gender wage discrimination pay no attention whatever to what the actual jobs are that people hold. In the medical profession, nurses and doctor incomes are mixed to produce the conclusion that men are overpaid relative to women in the medical profession. The data doesn't show that. What the data shows is that most doctors are men and most nurses are women. These researchers should go look at the data showing who is and who isn't applying to medical school.

But if your goal is to make political points, not to advance knowledge, then the current fads in the Economics profession are the way to go. If you've wondered why economists' predictions are so notoriously poor and why the economic performance of the developed countries have collapsed, look no further than the correlative trends in the academic discipline of Economics.

Sunday, October 2, 2016

College and professional athletes are now taking their political views to the workplace. Not content to use the normal political channels to express their views, these athletes put on the team uniform and snap photos of themselves in the team facilities, so that their team becomes part of the political process.

Interestingly, most of those who support the political expression voiced by these athletes despise college athletics and professional sports, so these athletes are mainly trying to anger their own fan base.

Deutsche Bank is reeling. If the bank collapses, it will likely lead to financial panic in the Eurozone. Why is Deutsche Bank reeling? The SEC has imposed a find of nearly $ 5 billion on the bank, which was already in a precarious situation.

Who pays this fine? Since the fine is for past misdeeds, only those currently at the bank or current shareholders will be paying this fine -- mostly middle class pensioners or after-the-fact investors are stuck with this bill. Virtually no bad guys will share in the hit. If you were guilty of any wrongdoing, you are long gone and will not pay this fine. Just innocent folks pay this fine.

Fining corporations is essentially taxing shareholders and not the same set of shareholders that were there at the at the time of the alleged crimes. Nope. The new and innocent get tagged in this brave new Jack Lew, Barrack Obama, Barney Frank world.

Go get the innocent. Go where the dollars are. Let the guilty go unpunished. That is the theme song of the Obama Administration. It's all about the money. There is not a hint of justice in any of this.

Meanwhile the European economy braces for potential disaster, thanks to Barrack Obama.

Saturday, October 1, 2016

There is an interesting article in today's WSJ, that centers around the following quotation:

"Growth has ground to a halt almost everywhere, and economists, investors, and ordinary citizens are starting to confront a grim new reality: the world is stuck in the slow lane and nobody seems to know what to do about it."

The article then quotes a variety of extreme-left economists (Summers, Krugman, Gordon, Reinhart, Rogoff) who mostly push their pet political themes -- demanding more government, mostly lamenting the very existence of free markets. All of these economists seem to advocate what I call the "new feudalism."

The "new feudalism" is a world where bureacrats and experts run everything. You won't recognize any of these folks in Adam Smith's Wealth of Nations, because they played no role in his scheme of things. Smith argued that individuals pursuing their own interest, unfettered by the heavy hand of government, was the reason why a few countries were breaking out of feudalism and into the modern era.

Now, we are headed in the other direction. Individuals are now the enemy of the state. Innovative companies and risk takers are public enemies. Dividing a constant pie is the new game with an army of bureaucrats to enforce the rules and place arbitrary fines and penalties upon their enemies. The politicians daily opine on their view of what private risk taking should be allowed and what shouldn't. Much of this is, of course, after the fact, when the results of risk taking are known.

The end game is a steady march back to feudalism, where the kings will be the politicians and the serfs will be those struggling in whatever is left of the free market after the politicians' lordly regulations have snuffed out the heart and soul of free economic activity.

Nowhere in Wladawsky-Berger's article is there any mention of the stifling regulations and arbitrary political interference in free markets that is now becoming commonplace in the US, Europe and Japan. No wonder Wladawsky-Berger is puzzled. Economic stagnation is the new reality and for good reason, though the left will never be able to figure it out, stuck as they are in a silly ideology comforting only to those with their head in the sand.